A robot takeover has long been the stuff of science fiction, but digitalization could be key in solving Germany’s labor shortage crisis, as its population ages.

A record 45.9 million people were employed by Europe’s largest economy in the fourth quarter of 2022, the German Federal Statistical Office found. But, while more people than ever have jobs, over half of German companies reported that they were struggling to find skilled workers to fill vacancies, according to German Chambers of Commerce reports from January.

Chancellor Olaf Scholz highlighted digitalization as a priority when he replaced Angela Merkel in November 2021, with a three-party coalition contract titled “Daring More Progress” pledging to implement digital technologies across the business world.

Aging populations tend to be faster at digitalizing their workforces — with Germany having the largest aging population in Europe, it’s unsurprising that it sits with Japan and South Korea as one of the countries utilizing technology in the workplace.

But what does enhancing the workforce through robots and digitalization actually look like?

Enhancing productivity

Digitalization manifests differently in every organization, whether through plate-carrying robots, self-checkout machines at grocery stores or using online platforms to chat to colleagues. In most cases, technology is added to make workflow more efficient and cost effective.

“We have to enhance productivity by technology,” Steffen Kampeter, chief executive of the Confederation of German Employers’ Associations told CNBC.

“There is a correlation between the use of modern technologies and the growth of economic growth and the labor market participation in most societies,” Steffen said.

Some 37% of Germans thought technological changes would increase their work productivity in 2018, according to Gallup research. Just 1% said that it would decrease productivity, while 62% opined technology wouldn’t have an impact.

What we see is a strong complementarity of digital technologies and economic activities.

Research by the analytics firm also suggested Germans aren’t afraid that robots will steal their jobs.

Only 10% of those surveyed believed implementing more tech would increase the risk of them losing their job, while 6% said it would decrease the chance of that happening. The remaining participants said that deploying more technology wouldn’t make a difference.

There won’t be major job losses as a result of digitalization, according to Ulrich Walwei, vice director of Germany’s Institute for Employment Research.

“There is this automation effect that means, of course, labor can be saved … But, on the other hand, it gives consumers and also firms opportunities to use their resources in a different way,” he said.

“What we see is a strong complementarity of digital technologies and economic activities,” Walwei added.

Europe’s largest economy also has the biggest stock of robots in the European Union — almost half of the total EU supply — according to a 2020 report by the European Commission. Most are installed in the automotive sector, but the food and beverage, industrial machinery and electronics industries have also taken on a high number of mechanical employees.

There were more than 20 robots per 1,000 manufacturing workers in Germany in 2015, the International Federation of Robotics and the European Jobs Monitor estimates, and that number is likely to have grown in the last eight years.

A hybrid future

Full digitalization is not desirable in many lines of work, even if it were possible.

“No one will give their grandma to a robot,” Norma Steller, chief product officer at German Bionic told CNBC.

German Bionic produces exoskeletons that counter-balance weight for employees in labor-intensive jobs and keep users in postures that will prevent them from injuring themselves.

Steller said the care sector would benefit from the addition of robots in workplaces, given its serious staff shortages and physically demanding roles.

“We kind of bridge the gap and put a robot on the human. The idea is we keep the human there with all the skills and emotions and empathy that is required for workplaces,” she added.

 

Ultimately, the goal of integrating robots into the workplace is to augment human capabilities, not replace them.

Cagri Pehlivan

CEO AT ROBOT4WORK

Digitalization also allows repetitive work to be automated, giving employees the chance to take on more mentally challenging tasks, says Cagri Pehlivan, CEO of robot services provider Robot4Work.

“Our robots can free up human workers to focus on more complex and creative work, leading to more fulfilling and engaging jobs,” Pehlivan told CNBC via email.

Outsourcing more physically intensive tasks to robots also facilitates older employees to stay in the workplace longer, Pehlivan said.

“By automating those tasks with robots, older workers can continue to contribute their valuable skills and experience to the workplace in a way that is safe and comfortable for them,” he said.

“Ultimately, the goal of integrating robots into the workplace is to augment human capabilities, not replace them,” he added.

Increasing numbers of older people are still working in Germany, with the employment rate of 55- to 64-year-olds up from 62% in 2012 to 71% in 2021, according to the German Federal Statistical Office.

This figure is only set to increase, as Germany looks to raise its state pension age from 65 to 67 in the coming years.

Challenges for digitalization

Germany is suffering from a digital skills gap, while some firms are “way behind,” when it comes to using digital technologies, Ulrich Walwei told CNBC.

″[Digital competency] is something which needs, of course, to be trained very early. That means also in schools and then also in apprenticeships and at university,” he added.

According to Eurostat data, 48.92% of the German population has “basic or above basic overall digital skills,” which is below the European Union average of 53.92%.

 

Almost 19% of individuals reported they had “above basic overall digital skills,” which is below the EU average of 26.46%, while 3.58% of Germans consider themselves to have “no overall digital skills,” which is slightly above the EU average of 3.04%.

People also have reservations about relying on robots. For example, 70% of 1,000 Germans polled by Gallup and Lloyd’s Register Foundation said that they would not feel safe being driven in a car without a human driver. Companies hoping to implement new technology also have a large number of regulatory hoops to jump through to guarantee user safety. Only after those tests are passed can digitalization start to become a seamless part of the working day.

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